Former FTX CEO Sam Bankman-Fried testified in his trial, but was at first not permitted to reply just before the jury.
After a handful of days of postponement, the trial of former CEO Sam Bankman-Fried has resumed on fees of fraud and deception that led to the speedy collapse of cryptocurrency exchange FTX.
The prosecutor’s final testimony
Opening the trial, the U.S. Justice Department prosecutor termed the subsequent witness, an FBI agent Marco Troiano.
Mr. Troiano is the individual who investigated the chat groups of the Signal messaging application on the phones of Gary Wang and Caroline Ellison, former managers of FTX and Alameda who surrendered to the US authorities and each testified in court towards Sam Bankman -Fried.
Agent Troiano explained that all through 2021-2022, Sam Bankman-Fried participated in additional than 300 chat groups on Signal, of which 288 had the attribute of immediately deleting messages just after a specific time period of time. The former FTX CEO had previously ordered staff to use Signal to send text messages to hide proof of breaches at the exchange.
Defense attorneys attempted to have the charge dismissed
At the finish of the prosecution’s series of testimonies, defense attorney Sam Bankman-Fried asked the court to dismiss the charge towards his consumer, on the grounds that the prosecution had not supplied ample proof, persuaded him to press fees for fraud and racketeering towards Sam Bankman. Fried.
The president of the court, Mr. Lewis Kaplan, rejected the defense lawyer’s appeal and asked to carry on the trial.
The initial two witnesses of the accused
Next it was the defense attorney’s flip to phone his initial witness, the attorney Kristal Rollewho represented Sam Bankman-Fried in the Bahamas among November 2022 and December 2022, i.e. from the time FTX went bankrupt until eventually Sam’s extradition to the United States.
Ms. Rolle explained that inside days of FTX’s bankruptcy, the Bahamian government ordered FTX to transfer all remaining assets to the Bahamas for management. Sam Bankman-Fried complied with this request and moved the assets into the designated wallets. At the identical time, the former FTX CEO also agreed to be interviewed by officials and handed in excess of his passport to keep away from the threat of fleeing.
The subsequent witness termed for questioning was Joseph Pimbley comes from PF2 Securities, a organization specializing in bankruptcy procedures. Mr. Pimbley explained he was employed to extract information on FTX consumers from AWS, totaling among 9 and eleven million.
However, Mr. Pimbley responded that he did not know no matter whether his information contained statistics about users’ crypto assets, was not conscious of the “negative allow” attribute that permitted Alameda to withdraw revenue from FTX, and did not carry on to get hold of the defendant Sam Bankman-fried.
Witness Sam Bankman-Fried
Interrogation by the defense attorney
As Coinlive previously reported, the defense lawyer determined to threat his method when he determined to invite the defendant, Sam Bankman-Fried, to reply in court to clarify his factors.
However, the presiding judge, Mr. Lewis Kaplan, manufactured a surprising choice Invite the jury to depart the trial, making certain that the confrontation with Sam Bankman-Fried takes place only among the judge and the attorney. The judge explained the jury will be invited back in the subsequent handful of days mainly because there is some information and facts that the court believes “the jury should not hear at this time.”
Enter the jury.
Judge Kaplan: I’m sending you residence. The situation will be determined early subsequent week.
The jury is out.
Judge Kaplan: Sit down, individuals. There are places of testimony that the government argues the jury really should not hear.— Inner City Press (@innercitypress) October 26, 2023
Much of Sam Bankman-Fried’s defense method revolved close to a document termed “data retention policy“, but was not presented by the defendant as proof in court mainly because “not found”.
At the starting of the interrogation with Sam Bankman-Fried, the defense attorney of the former CEO of FTX asked this individual what messaging applications he applied when operating the exchange and was advised that they integrated Telegram, Slack and Signal . As for the cause for working with Signal, Sam explained that it is a protection and message encryption application, which is vital for FTX mainly because “the exchange was hacked.”
When asked to clarify the hack, Sam Bankman-Fried corrected his response by saying “FTX has never been hacked, but third-party partners are.” Additionally, the exchange makes use of Signal mainly because it has the capacity to immediately delete messages just after a specific time period of time, avoiding staff from promoting organization secrets and techniques externally, which was the situation when the exchange was nevertheless based mostly in Hong Kong.
Regarding the information retention policy, Sam Bankman-Fried explained he has entrusted the exchange’s chief legal officer and principal lawyer, Mr. Dan Friedberg to do this. The former FTX CEO explained he respected the information retention policy and explained he only applied Signal for unimportant perform groups that did not involve producing selections.
Next, the defense lawyer asked about Sam Bankman-Fried North dimension, a shell organization founded by Alameda Research in 2020 with one particular of the functions of a financial institution. Sam Bankman-Fried stated that Dan Friedberg was the individual who gave him the charter paperwork for this organization to signal. Sam Bankman-Fried signed for each FTX and Alameda, as he explained he was the CEO of each providers at the time.
When asked if he considered it was legal for Alameda Research to consider revenue from FTX consumers, Sam Bankman-Fried explained yes.
[US v SBF without jury present]
Cohen: Why did you signal with each FTX and Alameda?
SBF: I was CEO of each at the time. FTX did not have a financial institution account.
Cohen: Did you assume accepting FTX deposits by means of Alameda was legal?
SBF: I did— Inner City Press (@innercitypress) October 26, 2023
Subsequently, Sam Bankman-Fried stated that Dan Friedberg was the individual who signed the account registration type at Signature Bank beneath the title North Dimension.
As for Alameda’s venture capital investments, Sam Bankman-Fried explained the revenue all came from Alameda Research, but by means of loans from FTX. The former CEO explained he had talked about the loan with his attorneys, together with Dan Friedberg and Can Sun. Bankman-Fried confirmed that he had consulted with the attorneys and obtained their approval, as properly as possessing drafted the loan ailments.
Regarding FTX’s terms of use, Sam Bankman-Fried explained he had only skimmed the contents and believed they only utilized to futures trading actions. These Terms of Use have been also drafted by Dan Friedberg and the law company wherever he functions, Fenwick & West.
Similar to other exchanges, FTX also keeps users’ crypto assets mixed in a group of cryptocurrency wallets.
The defense lawyer then asked Sam Bankman-Fried about Bahamian officials. The former CEO explained that just after the exchange failed and was hacked, the Bahamian government stepped in and interviewed him. Subsequently, he transferred aspect of his assets to the management of the Bahamas and handed in excess of his passport to the police.
Interrogation by the US prosecutor’s workplace
Subsequently, prosecutors from the US Department of Justice questioned Sam Bankman-Fried. The former FTX CEO explained he has started off working with the Signal app due to the fact 2020, together with groups with Dan Friedberg, and has been discussing and enabling the message deletion attribute due to the fact 2021.
Sam Bankman-Fried set Signal to delete messages just after a week, but did not seek advice from a attorney about it. The former CEO is “unsure” no matter whether the exchange’s information retention policy also does not mention Signal.
Under questioning by the prosecutor, Sam Bankman-Fried explained that in concept he could have deleted the information and facts information of the exchange at will. The former FTX CEO defended that the information policy only applies to consumer emails on the exchange, excluding Signal messages and the get started time of message deletion.
The prosecutor asked Sam Bankman-Fried’s attorney if he agreed to allow this individual delete messages in conversations with Caroline Ellison, Nishad Singh and Gary Wang, and the former FTX CEO explained no .
However, this individual believes that deleting messages linked to his request that Caroline Ellison put together seven money statements to hide Alameda Research’s revenue reduction or contemplate closing Alameda is acceptable. Yes, mainly because this is deemed an off-subject conversation and does not require to be recorded.
When asked about the conversation with FTX/Alameda managers about the $13 billion hole, Sam Bankman-Fried explained he did not don’t forget it and that it “depends” on no matter whether to have that conversation or not. Deleting messages also serves to avert statements from becoming disclosed and misinterpreted from their authentic goal.
FTX was then subpoenaed by the court to retain the information for investigative functions. The former FTX CEO consulted with attorneys, together with Dan Friedberg and Ryan Miller, about what information really should be stored. Sam Bankman-Fried says it was these two who determined what information and facts to preserve personal, as properly as telling the CEO to preserve conversations only about official small business selections.
Similarly, Alameda Research also has a information retention policy, but it is overseen by two co-CEOs, Caroline Ellison and Sam Trabucco.
When asked why North Dimension was founded, Sam Bankman-Fried responded that it was based mostly on Dan Friedberg’s guidance to assist FTX get a financial institution account in the United States. However, he explained he did not know why FTX moved clients’ deposit accounts from Alameda to North Dimension, even even though he was nevertheless the fund’s CEO at the time. Sam Bankman-Fried says he does not don’t forget several information at this stage. together with the origin of the organization title.
Sam Bankman-Fried, regardless of signing the paperwork himself to open a financial institution account for North Dimension, explained he only followed his lawyer’s directions and did not talk about the matter. He also argued that North Dimension was not a trading organization but a organization inside Alameda Research, regardless of paperwork stating otherwise.
Sam Bankman-Fried also does not don’t forget discussing it with his attorney…